A Company Is Considering an Iron Ore Extraction Project Which

question 43

Multiple Choice

A company is considering an iron ore extraction project which requires an initial investment of $508,000 and will yield annual cash flows of $154,000 for 4 years.The company's hurdle rate is 9%.What is the NPV of the project?
Present value of annuity of$1.
$$\begin{array} { | c | r | r | r | } \hline & { 8 \% } &{ 9 \% } & { 10 \% } \\\hline 1 & 0.926 & 0.917 & 0.909 \\\hline 2 & 1.783 & 1.759 & 1.736 \\\hline 3 & 2.577 & 2.531 & 2.487 \\\hline 4 & 3.312 & 3.24 & 3.17 \\\hline 5 & 3.993 & 3.89 & 3.791 \\\hline 6 & 4.623 & 4.486 & 4.355 \\\hline 7 & 5.206 & 5.033 & 4.868 \\\hline 8 & 5.747 & 5.535 & 5.335 \\\hline 9 & 6.247 & 5.995 & 5.759 \\\hline 10 & 6.71 & 6.418 & 6.145 \\\hline\end{array}$$

• A) positive $101,600
• B) negative $9040
• C) positive $9040
• D) negative $101,600

---

Definitions:

Full-time Workers

Employees who work a standard workweek, typically 30 to 40 hours, and are often eligible for benefits such as healthcare.

Employment Discrimination

Unfair treatment of employees or job applicants based on race, gender, age, religion, nationality, physical ability, or other characteristics irrelevant to job performance.

Productivity Factors

Variables that influence the output of production, including the quality of labor, technology, and the efficiency of processes.

Mean Earnings

The average income earned by individuals in a specific group, calculated by dividing the total income of the group by the number of individuals.